Ordering and Pricing Decisions in Supply Chain Under Bilateral Information Updating

Abstract

This paper investigates the decisions making of supply chain firms under bilateral information updating. Specifically, we consider a supply chain consisting one manufacturer and one retailer. The manufacturer and the retailer face an uncertain production cost and demand information, respectively. They commit an initial wholesale price and a minimum order quantity before production beginning, and make an agreement on wholesale price variation, additional order and demand information sharing. We find that the optimal wholesale price does not increase strictly in the production cost due to the impacts of market demand information updating. The order policy is affected by the updated information and the committed order quantity. The retailer orders a positive additional order facing a good market status but orders nothing facing a bad market status.